REO property that has no permit on addition

[Vicky Yu]

Newbie here, I just bought a SFR in N CA from Fannie Mae. It's a 3 br 2bth as well as addition(2 br right on the patio, attached to the house). Seems to me a lot of REOs in my area are like this. I just want to know if it's ok to rent it out like this. I mean more brs will help with cash flow but what happens if there is a fire that starts in the additional unit with no permit? Will insurance still cover? Does anyone have experience with this? I would love to hear from you. Thanks in advance!